Voluntary Carbon Market Picks Up Steam

July 20, 2007

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The voluntary carbon market has grown by 200% in 2006, with 2007 already proving to be a blow-out in terms of volume, market entrants, and development of transparent standards, according to State and Trends of the Voluntary Carbon Market (exec summary pdf, full report pdf), a report from Ecosystem Marketplace and New Carbon Finance (via Grist).

The trade in voluntary greenhouses gas emission credits grew to 23.7 million metric tons of carbon dioxide equivalent last year and was worth about $91 million.

The volume-weighted average price of carbon was $4.1 per tonne of CO2e, although transactions occurred for a vast range of prices; from $0.45 to $45 per tonne . Within this range the highest prices are being paid for projects with strong quality and verifiability attributes, such as landfill methane and coal mine methane, as well as the more publicly visible forestry projects and long term sustainable development projects, such as energy efficiency and off-grid renewable energy.

Since 2002, the number of organizations supplying carbon credits into the market has grown by 200 percent. About 43 percent of tons of carbon sold in the market came from North America (largely the U.S.).

The market is currently dominated by three types of projects: forestry, renewables, and industrial gases.

Private businesses, of course, were the largest buyers (by volume) and their main motivation was to comply with CSR. Quality of offsets is the most important issue for both buyers and sellers.

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